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First Crack Appears in Artificial Intelligence Bull Market

After big US tech firms released earnings, AI-related stocks lost $190 billion in market cap. 


NAS 100 – Daily Chart 

The NAS100 index has found resistance at the 17,600 level and could be ready for a broader pullback.

Ahead of recent earnings, we noted that the AI bull run of 2023 and 2024 needed to see consumer traction for AI tools. After earnings releases from Alphabet and Microsoft, AI-related stocks have lost a combined $190 billion in market cap. As those headlines hit the mainstream news, retail AI investment could slow, and large investors could take profits. 

Alphabet shares fell 5.6% after Google-parent’s fourth-quarter ad revenue missed expectations. Alphabet also outlined big spending plans for its AI plans in real estate and data centres. While the company was bullish about its AI development, analysts now realise that the public will not quickly rush to premium AI assistant tools.  

Google’s important cloud segment outperformed Wall Street targets. At the same time, Microsoft’s Azure also performed well, but investors are now impatient for the promised AI revolution. 

Microsoft beat analyst estimates for quarterly revenue as new AI features helped attract customers to its cloud and Windows services. However, its stock fell 0.7% in extended trade after hitting a record-high intraday earlier Tuesday. 

Microsoft’s stock market value rose above $3 trillion this month, beating Apple for the top spot. Elsewhere, chipmaker Advanced Micro slumped 6% after its forecast for first-quarter revenue missed estimates, even as more robust sales were projected for its AI processors. 

Short selling opportunities may be here in tech stocks, and any adverse development in stock markets globally could see a swift correction in the so-called “magnificent seven” tech names.

Outside of the AI names, Tesla has also been a poor performer, losing 25% of its value in a month due to fears of production and profitability.

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